PHOENIX (AP) -- Gov. Janet Napolitano on Wednesday reacted to Arizona's worsening budget problems by releasing initial plans to cope with revenue shortfall projections of varying amounts, including one as large as $800 million.

Separately, legislative budget analysts said the revenue shortfall in the $9.9 billion budget could total between $550 million and $1 billion due to the economic slowdown. Key lawmakers believe the revenue gap could be $1 billion or larger.

Also Wednesday, a senior Republican legislative leader said lawmakers are discussing the possibility of holding a special election early in 2009 to suspend a constitution restriction on legislative changes to voter-mandated spending.

Napolitano announced her still-developing budget fix plans just over three months after the Republican-led Legislature approved the budget at the Democratic governor's urging and over the objections of most GOP lawmakers.

Since then, revenue has fallen short of projections due to the housing industry slump and dampened consumer spending.

Napolitano's grim-to-grimmer plans' starting points include emptying the state's rainy day fund and what's left in special-purpose funds already largely drained to balance the budget.

The plans also call for spending cuts and belt-tightening throughout much of state government, though Napolitano said she'll protect services she considers vital.

Finally, the state could resort to such steps as selling or leasing out all or parts of the Arizona Lottery, taking a reduced, upfront payment of money due from tobacco companies under a lawsuit settlement and charging other states a fee for sending prisoners to private prisons in Arizona.

However, a tax increase is not on the table, according to Napolitano.

Napolitano said a "pessimistic" scenario would produce an $800 million shortfall in the state's $9.9 million budget and that a $320 million shortfall would be "optimistic" and only achievable if the economy rebounds very quickly to levels anticipated in the state budget.

A third, middle-ground scenario puts the gap between spending and revenue at $450 million, and Napolitano said some budget-balancing steps could be activated or discarded depending whether the actual shortfall is above or below that amount.

Napolitano said she would try to protect spending on K-12 schools, higher education, and social services that provide safety nets for children and vulnerable adults, including veterans.

"We are belt-tightening now but we must retain a long-term vision for Arizona and how we're going to come out of that, and that is what I'm doing," Napolitano said.

Napolitano's spending cuts for state government appear at least initially to focus on belt-tightening by agencies, rather than the elimination or retrenchment of entire programs.

She said she's continuing a partial hiring freeze that has saved an estimated $31 million so far and also directing agencies to also restrict travel, defer equipment purchases and eliminate "any expenses that are not mission critical and absolutely critical."

The public will see impacts, including longer waits to get telephone calls answered or to reach counters at Motor Vehicle Division offices, Napolitano said.

Napolitano also wants the federal government to pay nearly $500 million owed Arizona for costs resulting from illegal immigration. Napolitano has periodically billed the federal government for unpaid portions of those costs that have accumulated since 2003 under a federal law.

Later, Senate Majority Leader Thayer Verschoor said lawmakers are discussing the possibility of asking Arizona voters to temporarily relax a constitutional restriction on legislative changes to voter-mandated spending.

A March special election has been mentioned but January might be better to give lawmakers flexibility they need in upcoming budget work, said Verschoor, R-Gilbert.

Voter mandated spending include certain outlays for health care and education, and lawmakers have said its hands-off status crimps their ability to keep the budget in the black without considering tax increases or crippling other services.

"You'd need to eliminate everything that is not protected by the Constitution or the voters," Verschoor said.

Napolitano briefed reporters on her shortfall scenarios and still-developing plans in advance of a special budget and economic briefing held later Wednesday for sitting legislators and legislative candidates.

"If everything goes well, it will probably be a bad year," prominent Arizona private economist Elliott Pollack said. Approximately 60 of the 90 legislators attended. "It's just a bad situation," Pollack added.

Many Republican lawmakers voted against the budget when it was approved at Napolitano's urging last June and said it had too much spending.

Napolitano defended it as protecting vital spending and recognizing that much state spending is protected by voter mandates, court orders and federal law.

The governor said legislative action will be needed and that she will present her plans to legislative leaders soon in anticipation of November negotiations to decide what to do.

"This is not going to be done unilaterally," Napolitano said. "I believe at some point we will have a special session."

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On the Net:

Governor's Office: http://www.azgovernor.gov

Arizona Legislature: http://www.azleg.gov

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